According to the latest data released in the Singapore Digital Economy Report by the Infocomm Media Development Authority (IMDA), the adoption of artificial intelligence (AI) across Singapore’s business sector has significantly increased. Furthermore, the nation’s digital economy expanded to exceed $144 billion, accounting for a larger proportion of the country’s gross domestic product (GDP).
Digital Economic Growth and AI Penetration
The report, published on October 5, details substantial growth figures for the economy and technological integration. In 2025, AI adoption among all enterprises reached 23.5%, marking a notable rise from 14.7% in 2024. This increased utilization was observed across both small- and medium-sized enterprises (SMEs), where adoption climbed from 14.5% to 23.4%, and among larger corporations, where it jumped from 62.5% to 70.4% over the same period.
Overall, Singapore’s digital economy increased from $136.5 billion in 2024 to $144.1 billion in 2025. Correspondingly, its contribution to the nation’s GDP rose from 18.8% to 19.3% year on year. IMDA stated that this steady expansion confirms that digital technologies continue to reshape operations across virtually all industries and the way workers perform their jobs.
The report defines the digital economy using two main metrics: first, the value-add provided by the information and communications sector (covering telecommunications, computing, and software); and second, the additional value derived by non-tech industries through the adoption of digital tools and solutions.
Within these sectors, non-tech industries were the largest contributors to the digital economy, growing by 3.6% to $97 billion in 2025, compared to the $47.1 billion recorded for the tech sector, which expanded by 6.1% over the same duration.
Labor Market and Technology Talent
The labor market also reflected significant digital growth. Tech employment grew 3.8% year on year, reaching 222,200 workers in 2025, up from 214,000 in 2024. The fastest-growing roles were identified in the fields of AI, data, and cybersecurity. Wages in the tech sector remain high; in 2025, the median monthly salary for tech workers was $8,000, which is 60% higher than the overall median salary for all resident workers, which stood at $5,000.
Despite the high demand for specialized skills, the report indicated that the need for tech talent is concentrated outside traditional tech industries, with non-tech sectors leading the growth in tech employment at 5.3%, compared to 1.8% in the tech sector itself.
Adoption, Benefits, and Workforce Readiness
Digital integration remains widespread, with 96.4% of all businesses having adopted at least one of six key digital areas—cybersecurity, cloud technologies, e-payments, e-commerce, data analytics, and AI—in 2025, up from 95.1% the previous year.
Businesses are also planning for greater AI use; the percentage of enterprises that have not adopted AI but intend to do so within the next 12 months doubled from 5.6% in 2023 to 12.1% in 2025. For companies already utilizing AI, nearly two out of five are transitioning from experimental use to broader operational integration.
Businesses reported that the primary benefits derived from AI were improved efficiency and better resource utilization. Nearly 88% of surveyed companies cited gains in productivity and processes, followed by 44% citing lower costs and optimization of resources. These findings were based on an IMDA survey involving approximately 7,000 businesses across various sectors.
At the worker level, AI use is accelerating, with 86% of workers reporting the use of AI at work in 2026, an increase from 78% the previous year. The leading benefits cited by AI users were increased productivity (73%), better work quality (69%), and enhanced problem-solving abilities (68%). Workers frequently used AI for generating and editing content, including written and visual media (77%). Other common applications included automating processes (64%) and data exploration (52%).
However, a significant skills gap was identified. While 68% of workers recognize the necessity of upskilling or reskilling in AI, only 37% reported having received such training within the preceding 12 months. Workers cited various reasons for not attending training, including not being nominated by their employers (35%) or lacking sufficient time.
Government Initiatives and Expert Commentary
To address this gap, IMDA is expanding its National AI Impact Programme. This initiative aims to enhance AI capabilities among both tech and non-tech workers. Over the next three years, the program will upskill 40,000 tech professionals, providing them with advanced skills, including expertise in agentic AI (bots capable of performing actions with minimal human supervision). Furthermore, 100,000 non-tech professionals are slated for training by 2029, with programs already running in fields such as law and accountancy.
Industry leaders provided commentary on the current landscape. Ang Yuit, president of the Association of Small and Medium Enterprises, noted that AI adoption remains inconsistent among SMEs, citing difficulties related to time, budget, and manpower needed to automate processes. He added that specialized talent for implementing AI in enterprises is scarcer compared to established functions like social media marketing.
Selena Ling, chief economist at OCBC, cautioned that the growth of the digital economy may not distribute benefits evenly across the workforce. She stated, “It depends on whether workers are in growing industries with core digital domains that have a talent shortage, or if workers are in industries that are lagging behind and which may stagnate without government intervention due to structural skills mismatch or job displacements arising from AI and tech automation.”
